25th January 2013 | Posted by: Daniel Birkett | Market Analysis

The UK gas system sat more comfortably yesterday, with a drop in storage withdrawals after higher domestic production and BBL flows. Pressure was felt after news that the Elgin-Franklin fields are likely to restart in mid-February. Meanwhile, ICE February 2013 prices fell by 1.22% at market close. Today, we can expect to see UK NTS demand drop by around 15 mm cm compared to yesterday - with demand falling further next week. What's more, following yesterday's price drop, we could see a technical rebound for February 2013 prices today. In terms of power, spot prices could well be down next week. Temperatures are expected to rise from tomorrow and the latest wind production forecasts for Germany suggest higher output (around 10GW) by mid next week.

How did the energy markets close?

Gas markets saw prompt continue to fall throughout yesterday, which was down to milder weather and a well-supplied system. Day-Ahead fell from its opening to close at 66.90ppt. Elsewhere on the curve, we saw gains as rallying Brent supported seasonal contracts. Day-Ahead prices for power closed up just £0.10/MWh on its opening figure, and some contracts didn't budge at all from their opening price. So, all in all, it was a fairly quiet day for power.

How did the energy markets open?

This morning saw news that the outage at Norwegian Troll is expected to run into early February - as flows took another fall (running at around 80mcm). So, after heavy storage withdrawals for about 2 weeks, storage sites could be given the opportunity to replenish their stocks during the coming week as milder weather is forecast. Turning to prices, we say a drop of 1.40ppt in Day-Ahead prices and Feb13 was 0.15ppt lower. Despite the Monday demand premium, power's Day-Ahead saw a sizeable drop of £4.60/MWh. A wind power peak of 4500MW is expected today, and forecasts over the weekend look good. Elsewhere, weak carbon pulled down other contracts - leading to small losses.

1-year forward prices

The 1-year forward prices for commercial gas and power have experienced a change from yesterday's figures - with gas increasing and power taking a small hit. You can see this represented in the graph below.

Latest Brent Crude Oil price

Nearby prices for Brent 1st increased a little yesterday after strong economic data from China, Germany and the US - but didn't manage to rise above its high of $113.65/bbl - eventually closing at $113.28/bbl. In order for Brent 1st nearby prices to reach $116/bbl, the resistance around $113.65/bbl needs to be broken. This doesn't look possible today - with supports standing at $112.7/bbl. It's also worthwhile noting that the market is overbought today. Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.